After breaking past support at the 124.00 major psychological level a couple of days ago, the pair finally got rejected at 122.00, another major psychological level. Price then made its way back up the the previous support area at 124.00, giving us a textbook break-and-retest setup in the process. Price did get repelled when it reached the 124.00 area, and it’s actually consolidating just below it, which is a good sign that the price level is well-defended by the sellers. In addition, the 124.00 area happens to lie exactly between the 38.2% and 50% Fibonacci retracement levels. The moving averages are also indicating a healthy downtrend and the 200 SMA is even acting as dynamic resistance. Furthermore, stochastic is already pointing down and moving away from the overbought area, so perhaps forex traders bearish on the pair are already taking control.
GBP/USD broke out of a descending channel that we identified on Monday with sufficient and convincing momentum before finally consolidating when it reached the 1.5400 major psychological level. As price continued to consolidate, it eventually formed what looks like a bullish flag pattern. But if we apply the Fibonacci tool, we can see that price is also consolidating around the 38.2% Fibonacci retracement level. Hence, we have two scenarios on this forex chart. Looking at our technical indicators, the moving averages are still in downtrend mode, but they’re already coming closer together for a potential cross-over. Also, price has been closing above both the 100 SMA and 200 SMA, so forex traders bullish on the pair seem to have an advantage. Stochastic is also pointing up and moving higher, which is another technical argument for the bulls. In any case, if the bullish flag is validated, then price could move for around 250 pips since that is roughly the height of the forex chart pattern.
Sweet! EUR/NZD seems to be imprisoned inside a trading range or rectangle on its 1-hour forex chart, with resistance around the 1.7880 handle and support around the 1.7320 handle, giving us around 560 pips worth of volatility. Currently, price seems to be testing the trading range’s support area, so better keep an eye on that. The moving averages aren’t really much help since they’re consolidating, but stochastic is already indicating potentially oversold conditions, so forex traders who are bullish on the pair may start nibbling-in soon. As usual, make sure to practice proper risk management should you find a trade based on this or any of the other charts.
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To get the complete picture and avoid getting blindsided by economic data, you also have to do your fundamental analysis. Lucky for us, Pip Diddy fills us in on what we need to know about fundamentals with his Daily Forex Fundamentals.AUD/CAD 1-hour Forex Chart